Litigation Release No. 19855 / September 29, 2006

SEC HALTS FRAUD BY PORTLAND, OREGON INVESTMENT ADVISER

Los Angeles, Calif., September 22, 2006 -- The Securities and Exchange Commission yesterday obtained a court order halting an ongoing fraudulent scheme perpetrated by an Oregon-based investment adviser who is alleged to have raised at least $16 million from investors and misappropriated at least $13 million in investor funds.

The Commission filed an enforcement action against C. Wesley Rhodes, Jr. age 55 and a resident of West Linn, Ore., and three Oregon companies he controlled -- Rhodes Econometrics, Inc., an investment adviser registered with the Commission; The Rhodes Company, an unregistered investment adviser; and Resource Transactions, Inc., another unregistered investment adviser. Acting on the Commission's lawsuit, the Honorable Michael W. Mosman, United States District Judge for the District of Oregon, issued orders freezing assets and appointing a temporary receiver over any entity directly or indirectly controlled by Rhodes.

The Commission's complaint, filed yesterday in federal court in Portland, Ore., alleges that since at least 2004, Rhodes and his companies have raised at least $16.1 million from approximately 50 investors, including several senior citizens, misrepresenting that he would invest their funds in pooled investment funds or directly in stocks and bonds. According to the complaint, Rhodes invested only $3.9 million of the funds raised from investors in securities and made a net profit of only $224,000 on the invested funds. Undisclosed to the investors, Rhodes misappropriated and misused as much as $13.3 million of investor funds to pay his personal and business expenses and to pay $6.3 million to other investors. The complaint alleges that Rhodes used investor funds to pay for home improvements, furs, jewelry, and at least $1.7 million for his hobby of purchasing and restoring classic and exotic cars.

In its lawsuit, the Commission obtained an order (1) freezing the assets of Rhodes; (2) freezing the assets of, and appointing a temporary receiver over, Rhodes Econometrics, Rhodes Company, Resource Transactions, and any other entities whose assets Rhodes controls; (3) preventing the destruction of documents; and (4) temporarily enjoining Rhodes, Rhodes Company, and Resource Transactions from future violations of the antifraud provisions of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and temporarily enjoining all defendants from future violations of the investment advisory antifraud provisions of Section 206(1) and 206(2) of the Investment Advisers Act of 1940. The Commission also seeks preliminary and permanent injunctions, disgorgement, and civil penalties against all defendants. A hearing on whether a preliminary injunction should be issued against the defendants and whether a permanent receiver should be appointed is scheduled for October 2, 2006, at 10:00 a.m.

The Oregon Department of Consumer and Business Services, Division of Finance and Corporate Securities also instituted proceedings against Rhodes Econometrics and Rhodes, a state licensed investment adviser representative. On September 15, 2006, the Division of Finance and Corporate Securities issued two administrative orders, alleging numerous violations of the Oregon securities law. Among other sanctions, the orders immediately suspend, and seek the permanent revocation of, Rhodes's investment adviser representative license.

The Commission acknowledges the assistance of the Oregon Department of Consumer and Business Services, Division of Finance and Corporate Securities, in this matter.